Govt simplifies industrial licensing process to improve ‘ease of doing biz’

The fresh guidelines have also removed the annual capacity for production of defence items.

However, licensees will now be expected to submit half-yearly production returns to the Department of Industrial Policy and Promotion (DIPP). With Prime Minister Narendra Modi keen to lower compliance burden on firms as part of the ‘Make in India’ scheme, removal of annual capacity in industrial licences is understood to have been discussed by the industrial licensing committee led by Amitabh Kant, secretary, DIPP.

As part of the initiative, the ministry has also permitted sale of defence items to government entities without prior approval of the Department of Defence Production (DoDP).

“However, for sale of the items to any other entity, the licensee shall take prior permission from the DoDP,” said the release.

Meanwhile, in a separate move, the finance ministry has set up a committee led by TK Vishwanathan, former secretary general, Lok Sabha, and former law secretary, to study the corporate bankruptcy legal framework in India.

The move is expected to help in faster and smoother winding up of loss-making firms. “The committee will examine the whole gamut of issues relating to bankruptcy,” the finance ministry said in a statement, adding that it will submit its report by February 2015.

As part of the review, the panel is expected to look into issues including why bankruptcy matters, early detection and resolution of financial distress, protection of interest of stakeholders, changes in the rescue mechanism, the role of the institutions engaged in the process of rescue and liquidation as well as liquidation procedure for smaller companies.

Finance minister Arun Jaitley had announced in his Budget Speech of 2014-15 that an entrepreneur- friendly legal bankruptcy framework would be developed for SMEs to enable easy exits.

The dual moves would also help improve India’s ranking on the Doing Business report where the country is rated 134 out of 189 countries in 2014. While it ranks 121 in resolving insolvency, starting a business is seen even more difficult for which it is placed at the 179th spot. Noting India’s low ranking in the ease of doing business, Prime Minister Narendra Modi had last month said that the government would aim for a much higher ranking and take it up to the top 50.